From: Biniam Tekle (biniamt@dehai.org)
Date: Tue Feb 23 2010 - 11:22:58 EST
http://www.nevsun.com/news/2010/february23/
2010 Press Releases
February 23, 2010
Nevsun Reports Increased Cash Flow Projections for 2011
Vancouver, British Columbia -- Nevsun Resources Ltd. (TSX:NSU / NYSE
Amex:NSU) is pleased to provide a brief update on the gold/copper/zinc Bisha
Project in Eritrea. As a result of the recent financing, there have been
considerable improvements to the project’s economics.
Highlights
Increased Cash Flow projections in 2011
Mine construction now 50% complete
Resource expansion at current metal prices
The Bisha mine is now fifty percent (50%) complete with plant commissioning
targeted as early as November 2010. The Company expects Bisha to be cash
flow positive in Q1 2011, with a 4% increase in the capital budget to $260M
(originally estimated at $250 million).
Nevsun continues to post pictures of construction progress in the Company’s
photo gallery available at http://www.nevsun.com/project/gallery/.
Revised Economics
As a result of financing the project entirely by equity rather than debt,
Bisha’s projected cash flow model has increased through the elimination of
financing costs and debt repayment. The chart below demonstrates the net
cash flow at varying metals prices, after tax and capital expenditure, for
100% of the project:
Project Summary
Internal Rate of Return (IRR) The IRR for the Project using the above high
metals case is 63%, mid metals case is 45% and low metals case is 20%.
Deposit Gold, Copper Zinc Volcanic Massive Sulphide (VMS)
Reserves 20 million tonnes
Mine life Open pit 10 years, plus significant expansion likely (see below)
Process methods Gold in oxide by carbon in leach for 2 years and then copper
and zinc by separate floatation circuits
Expansion Capability
The economics noted above were conservatively based on a shallow pit model
(depth to 200 meters) using low metals price assumptions ($400/oz Gold,
$1.05/lb Copper, $0.50/lb Zinc). When one increases the metal price
assumptions, the pit design will go much deeper, with limited additional
strip ratio. For example, the strip ratio for the current 10 year mine life
is approximately 4:1, as compared to a strip ratio of approximately 5:1 if
the pit is re-designed to 400 meter depths, using $2.00/lb Copper and
$0.75/lb Zinc. (For reference only, current commodity prices are now roughly
$1,100/oz Gold, $3.30/lb Copper and $1.00/lb Zinc).
In addition to resources open at depth, the Company has identified two
additional deposits within its licensed areas.
State Support
Nevsun has been operating in Eritrea for over ten years and has developed a
very good relationship with the Eritrean government. The State has been a
strong supporter of a responsible mining industry within the country, is a
partner in the development of the Bisha mine and has honored all of its
commitments in our business arrangement. Nevsun is very pleased to have the
State as its partner.
Forward Looking Statements:
The above contains forward-looking statements concerning progress of the
project, expected costs, project economic characteristics, mine expansion
and support of the Eritrean government. Forward-looking statements are
frequently, but not always, identified by words such as “expects,”
“anticipates,” “believes,” “intends,” “estimates,” “potential,” “possible”
and similar expressions, or statements that events, conditions or results
“will,” “may,” “could” or “should” occur or be achieved. Forward-looking
statements are statements about the future and are inherently uncertain, and
actual achievements of the Company or other future events or conditions may
differ materially from those reflected in the forward-looking statements due
to a variety of risks, uncertainties and other factors, including, without
limitation, those described in the Management Discussion and Analysis of the
Company. The Company’s forward-looking statements are based on the beliefs,
expectations and opinions of management on the date the statements are made
and the Company assumes no obligation to update such forward-looking
statements in the future. For the reasons set forth above, investors should
not place undue reliance on forward-looking statements.
NEVSUN RESOURCES LTD.
Cliff T. Davis
President & Chief Executive Officer
For further information, please contact:
Kin Communications
Tel: 604 684 6730
Toll free 1 866 684 6730
Email: ir@kincommunications.com
Website: www.nevsun.com
----[This List to be used for Eritrea Related News Only]----